N.Y.’s Silver Loses 2nd Bid|to Nix Corruption Charges

MANHATTAN (CN) – For the second time since he was indicted on corruption charges, New York Assemblyman Sheldon Silver failed on Friday to convince a federal judge to toss federal extortion and kickback charges against him. Arrested on Jan. 21, Silver subsequently resigned his position as speaker of the New York Assembly to battle allegations that he disguised legitimate income from asbestos litigation and real-estate referrals from a private law practice. A superseding indictment added four other charges, including money laundering. Since late 2002, two law firms allegedly paid Silver more than $6 million, including more than $5.3 million from the firm Weitz & Luxenberg, according to his criminal complaint. Weitz & Luxenberg specializes in asbestos-related claims. Silver, who is affiliated with the firm, directed state funds to a Columbia University researcher, who referred his mesothelioma patients to his firm, prosecutors say. Silver allegedly made another $700,000 by convincing two real estate developers to be retained law firm paying him in return for his support of legislation supported by the developers’ lobbyists. The final set of charges allege that Silver washed his ill-gotten gains in “high-yield investment vehicles not available to the general public.” In April, U.S. District Judge Valerie Caproni refused to dismiss an earlier indictment on the grounds that prosecutors tainted the jury by trying him in the press. She slapped U.S. Attorney Preet Bharara for “stray[ing] so close to the edge of the rules governing his own conduct” that Silver had a “non-frivolous” claim that his fair trial rights had been impinged. Prosecutors have kept mum about the case since then, and Silver’s new motion to dismiss does not accuse them of misconduct. Instead, Silver’s attorney Steven Molo argued that the prosecutors overshot their claims. At most, the alleged asbestos scheme amounted to coercion, rather than Hobbs Act extortion, the defense team said. Disagreeing, Caproni found that the government alleged “facts consistent with a theory of third-party extortion.” Silver also attempted to recast that the alleged payments as undisclosed conflicts-of-interest rather than the more serious category “bribes and kickbacks” necessary for honest services fraud. Here, Caproni found: “Silver’s argument misses the distinction between the two categories of cases.” “The fact that the payments Silver allegedly received as ‘bribes’ or ‘kickbacks’ were funneled through entities in which he had an undisclosed interest does not transform the bribery or kickback schemes into ‘undisclosed conflict-of-interest’ schemes,” the opinion states. While Silver described the money laundering allegations as unconstitutionally vague, Caproni found them proper and relevant to the government’s broader case. “Evidence that Silver went to lengths to conceal his allegedly ill-gotten gains is evidence both of Silver’s knowledge that the money that he received constituted ‘criminally derived property’ … and evidence of Silver’s consciousness of guilt regarding his allegedly fraudulent and extortionate activities,” the opinion states. Though Silver argued that this evidence would make him less accessible to the “average juror,” Caproni scoffed at this notion in a footnote to her opinion. She noted that allegations about the investment vehicle are, ” with all due respect to the defendant, bland in their likely impact on an average New York juror as compared to the far more sensational allegations regarding defendant’s benefiting to the tune of millions of dollars for misuse of his official position and misappropriation of taxpayer dollars.” The government must provide a bill of particulars in the case by Aug. 14. Silver’s attorney Steven Molo did not immediately respond to a request for comment.

EDITOR’S NOTE: This story has been updated to clarify that Weitz & Luxenberg has not been accused of knowledge of any wrongdoing alleged in this case.